The Franco-German compromise on the automotive industry risks undermining the EU’s climate targets and trade partnerships, Bruegel warns

The Franco-German compromise for the automotive industry risks weakening the climate transition, production modernization and the European Union’s trade relations, warns an analysis published by Bruegel on October 20, 2026. Ignacio García Bercero, Simone Tagliapietra and Jeromin Zettelmeyer criticize the association between relaxing requirements on automobile emissions and restrictive preferences for products manufactured in the EU. In their assessment, industry protection must encourage restructuring and the transition to electric vehicles, while cooperation with trading partners can provide a larger market for this transformation.

In brief

Bruegel criticizes the Franco-German approach of October 16, which it interprets as a combination of relaxing the 2035 automotive target and restrictive “Made in EU” preferences. The declaration by the two governments does not itself amend European legislation.

France and Germany argue that flexible rules and support for European production can preserve climate ambition, investment and jobs. The Bruegel authors believe that this combination risks delaying electrification.

The EU’s binding climate target for 2040 is a 90% reduction in net greenhouse gas emissions compared with 1990. It concerns the entire European economy, not automobiles exclusively.

The authors warn that preferences for subsidies and public procurement could affect Japan, South Korea, Türkiye, Morocco and the United Kingdom and could conflict with the EU’s trade commitments.

The proposed alternative is “Made with the EU”: temporary protection compatible with WTO rules, accompanied by industrial modernization and reciprocal access to public procurement and incentives for electric vehicles.

The analysis starts from the joint declaration published by the French presidency on October 16. Paris and Berlin present a package that combines decarbonization with flexible rules adapted to technological conditions and market circumstances. The governments state that they seek to maintain climate ambition and support investment, research, European production and resilient supply chains. For them, European preference should help the industry develop and manufacture the next generation of electric automobiles in Europe.

Bruegel experts challenge the effects of this formula. In their interpretation, France accepted German pressure for a further relaxation of the target for reducing automobile CO₂ emissions by 2035, while Germany supported a highly restrictive version of “Made in EU” preferences. The authors consider that two previously competing national positions have thus become a joint political request. The initiative may influence European negotiations, but France and Germany cannot change EU rules on their own.

The first criticism concerns climate. The authors argue that weakening requirements for automobiles would make it more difficult to achieve the European target for 2040. The European Climate Law already establishes a binding target of a 90% reduction in net greenhouse gas emissions compared with the 1990 level. “Net” means that removals are subtracted from emissions, and the target applies to the EU economy as a whole. Bruegel’s warning concerns the contribution of automotive policy to this target, without presenting the 90% figure as a separate obligation for automobile manufacturers.

The second criticism is industrial. Bruegel accepts the idea of temporary trade protection, through safeguard measures compatible with the rules of the World Trade Organization, to give the sector time to adapt to Chinese competition. However, the authors insist that this period must be used to restructure companies and modernize technologies. In their assessment, relaxing emissions requirements would prolong the dependence of some German manufacturers on diesel and other internal-combustion engines, while competitors consolidate their position in electric vehicles.

This argument continues the direction of a Bruegel analysis from September 22, 2026, which recommends a plan to transform the sector instead of excessive trade protection. The key issue is using public support for competitiveness and technological adaptation. Protecting existing production without incentives for change could delay the necessary investments, the authors argue.

The third criticism concerns trade partnerships. The authors warn that limiting incentives and preferences in public procurement to EU production would affect countries whose automotive industries are closely linked to the European market: Japan, South Korea, Türkiye, Morocco and the United Kingdom. They consider that a restrictive version could violate the EU’s commitments under the WTO and trade agreements. The legal consequences would depend on the specific rules adopted at European level.

Bruegel recommends that the European executive be given a negotiating mandate with interested trading partners to guarantee reciprocal access to public procurement markets and incentives for the use of electric vehicles. The authors pay particular attention to Türkiye and Morocco, which have not yet undertaken such public procurement commitments. In their view, cooperation would create a larger market for investment in the clean automotive industry.

The authors propose extending this logic to other industrial sectors, including low-emission steel: reciprocal access to markets that stimulate demand and the reduction of barriers to the intermediate materials needed for clean production. The formula “Made with the EU” summarizes their alternative for European industrial policy: supporting transformation through partnerships and reciprocity. It is a public policy recommendation, whose possible measures would need to be negotiated and adopted by the competent institutions.

https://2eu.brussels/ro/analysis/compromisul-franco-german-pentru-industria-auto-risca-sa-afecteze-clima-si-relatiile-comerciale-ale-ue-avertizeaza-bruegel